Three people connected to a Minnesota drug and alcohol treatment center have been charged in federal court with defrauding Medicaid of over $30 million and spending that money on lavish personal items including chartered private jets, luxury cars, and designer clothing and handbags.
A 13-count indictment lays out charges of conspiracy to commit wire fraud, wire fraud, and money laundering of proceeds derived from fraud, announced U.S. Attorney Andrew Luger.
Charged are Shawn Ashley Grygo, 37, of Forest Lake, Shantel Rene Magadanz, 34, of Stacy, and Heather Lynn Heim, 46, of St. Paul who allegedly carried out a systematic overbilling scheme involving Evergreen Recovery in St. Paul.
According to court documents, between March 2018 and July 2024, the three defendants devised and carried out a health care fraud scheme to overbill for drug and alcohol treatment services.
Authorities say the defendants used Evergreen Recovery, Inc., which is an outpatient drug and alcohol treatment center, to defraud Medicaid and other health care programs by billing for treatment that was not provided, services that were not eligible for reimbursement, and billing for treatment services clients were required to attend as a mandatory condition of remaining in free housing provided as a kickback.
The indictment states that in order to maximize the amount of fraudulent Medicaid claims, the defendants used free housing in Evergreen-controlled “sober” homes as a kickback to induce clients to enroll and remain in Evergreen Recovery treatment so that the defendants could use those clients’ names and identifying information to overbill Medicaid.
In order to induce Medicaid-eligible patients to enroll in the program, the defendants allegedly recruited people from homeless shelters and encampments, residential drug treatment programs, and county probation offices looking for places to put people being released from jail.
As part of their conspiracy scheme, the defendants allegedly told clients at intake—and repeatedly throughout their stay—that their entitlement to free housing was contingent on their participation in at least five group counseling sessions per week and a weekly individual session with their primary counselor. If a client’s attendance fell short of the requirement, the defendants and others threatened clients with being locked out of free housing and having their belongings put on the curb, all in order to compel utilization of services, according to Luger’s office.
As alleged by the indictment, the conspiracy scheme also involved fraudulent practices designed to facilitate overbilling for group counseling, one-on-one counseling, and treatment coordination services.
As part of their scheme, the defendants allegedly created and facilitated the backdating of electronic health record chart entries weeks or months after the purported date of services. On at least one occasion, the defendants and others stayed at the office all night before a visit by licensing regulators in order to create hundreds of untimely chart entries, the indictment alleges. The defendants are also accused of hiring Peer Coaches and directing them to log their time and activities in a manner that misrepresented the circumstances under which they were interacting with clients in order to facilitate systematic overbilling.
The indictment details nearly $100,000 in payments from Evergreen accounts to Louis Vuitton, a designer clothing and accessory brand.
Grygo, Magadanz, and Heim are each charged with one count of conspiracy to commit wire fraud and nine counts of wire fraud. Grygo is also being charged with three counts of money laundering.
Grygo is expected to make her initial appearance on Monday, Dec. 23, 2024. Magadanz and Heim made their initial appearances on Dec. 19, 2024, and were released on conditions, including a condition prohibiting contact with former clients and employees of Evergreen Recovery and its related entities. Booking photos were not made available.
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Minnesota Crime Watch & Information publishes news, info and commentary about crime, public safety and livability issues in Minneapolis, the Twin Cities and Greater Minnesota.
Crime Watch MN
Minnesota Crime Watch & Information publishes news, info and commentary about crime, public safety and livability issues in Minneapolis, the Twin Cities and Greater Minnesota.
